Congress Braves First Steps in Medicare Reform

Seniors beware: Congress is considering changes to what Medicare will pay for, and what’s coming out of your pocket.

Congress is getting serious about changes to Medicare, even if that means cutting coverage to services that senior citizens have long enjoyed.

At issue are what’s known as Medicare “extenders,” tacked-on money that Congress has to approve annually to fund the program’s coverage for beneficiaries with chronic and debilitating conditions. In past years, Congress has passed a blanket extension of the payments, which include such things as funding for rural and low-volume hospitals, ambulance rides, specialized care for needy patients, and outpatient therapy.

But this time around—after trillions in debt and having vowed to root out waste—Congress is attempting to be choosier, looking to move certain expenses off of the federal books. Currently, legislators are mulling two different plans: one from the Senate Finance Committee and the other from the Medicare Payment Advisory Commission (MedPAC), the independent congressional advisory board established in 1997 to advise Congress on Medicare policy.

And as they make their decisions, lawmakers will be deciding what services seniors’ still get their government plan to cover, and which ones they will have to find funding for elsewhere. Here are a few services on Medicare’s chopping block.

Rural Hospitals

Under the current system: Congress votes each year to grant additional payments to hospitals in rural areas that see a low number of patients, in order to guarantee access for beneficiaries in the event that a hospital can’t afford to stay in business.

Under Senate Finance: The current situation would remain in place.

Under MedPAC: MedPAC does not make a specific recommendation, but it notes that taxpayers may be funding more hospitals than they need to, because the payments can go to support two competing low-volume hospitals in rural areas, where patients would only need one to guarantee access to care.


Under the current system: Each year Congress votes to pay extra for ambulances, transportation in rural areas, and care flights.

Under Senate Finance: Ground and super rural transport get extra payments until Jan. 1, 2019, when the Health and Human Services Department will decide whether they’re necessary.

Under MedPAC: MedPAC recommends letting the add-on payments expire, which they would do automatically at the end of March unless Congress acts. MedPAC says the payments are unnecessary. In their data analysis from 2007 to 2011, MedPAC found a rapid increase in Medicare beneficiaries’ use of ambulatory services for nonemergency purposes—for example, to dialysis appointments—as well as growth in nonemergency ambulatory services provided by a small number of for-profit suppliers and private-equity firms entering the market, suggesting “that profit opportunities in the industry have been available,” according to MedPAC Chairman Glenn Hackbarth’s written testimony to the House Energy and Commerce Subcommittee on Health.

Special Needs Plans

Under the current system: Medicare offers specialized coverage to beneficiaries living in nursing homes, beneficiaries with chronic conditions, such as end stage renal disease or HIV/AIDS, and beneficiaries who are also eligible for Medicaid. The coverage helps coordinate care for beneficiaries who need a wide variety of services.

Under Senate Finance: Senate Finance is proposing phasing out all of these types of plans, except the ones for beneficiaries living in nursing homes.

Under MedPAC: MedPAC says some of those plans—such as the ones for HIV/AIDS patients—produce positive health outcomes and should remain in effect. Without the SNPs, beneficiaries would be rolled into Medicare Advantage plans.

Outpatient Therapy

Under the current system: Medicare payments for outpatient therapy is capped, with those who qualify for the exceptions process subject to a claims review before Medicare will reimburse. The process has caused some providers—including long term care facilities and nursing homes—to continue providing treatment, only to find out that Medicare will not be paying them back.

Under Senate Finance: Senate Finance wants to do away with the caps altogether, allowing HHS to determine which specific procedures or conditions will require automatic claims reviews. Providers would have to obtain preauthorization, meaning they could not provide treatment until the claim is reviewed.

Under MedPAC: MedPAC wants to keep the caps and reduce them, to limit unnecessary spending by some beneficiaries and increase oversight on others who seek a lot of therapy.

And All of It While Racing the Clock

As Congress mulls changes, it will have to do it on a deadline—payments for most of the programs are set to expire March 31.

But how quickly Congress will come to an agreement before that deadline is unclear.

Montana Democrat Max Baucus, chairman of the Senate Finance Committee, has said he’d like to see it done before he assumes his new role as ambassador to China, according to Julius Hobson, a lobbyist at Polsinelli Shughart who represents physician groups and long-term-care facilities and a former director of congressional affairs at the American Medical Association. Senate Majority Leader Harry Reid, D-Nev., said at a fundraising event that his goal is to have Baucus’s confirmation completed by mid-February, Hobson said, and getting the whole “doc-fix” package ready by mid-February “is a tall, tall order.”

While the Senate Finance proposal is ready for floor action, both the House Energy and Commerce Committee and the Ways and Means Committee are working out the extenders policies and the pay-fors on their respective versions of the permanent “doc fix.” A spokesman for the Senate Finance Committee said the three are in ongoing negotiations about the proposals, and a spokeswoman for the Ways and Means Committee said they are reviewing the recommendations from Senate Finance, MedPAC, and key stakeholders—such as long-term-care facilities and nursing homes—in their work.

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